Who loses in a government shutdown?

After approving a stopgap measure to keep the government funded
for another week, lawmakers will have until Friday at midnight to
negotiate a larger spending package.

The thought of a government shutdown makes many U.S. consumers
cringe, especially if they depend on the federal government for
medical care, retirement benefits and other critical services.

But even without a budget in place, the federal government never
fully shuts down.

“In a government shutdown, there is some discretion for the
government to protect the vital agencies — those related to
national security — so it’s not like they’re going to bring all the
soldiers home,” says Marc Goldwein, senior policy director at the
Committee for a Responsible Federal Budget in Washington, D.C. “But
most government functions that we are used to will stop during a
shutdown.”

The hard part for consumers is it’s difficult to predict which
operations will be deemed essential and which will be halted. It’s
mostly up to the discretion of the Trump administration.

“It all depends on what the president prioritizes and what
federal unions are willing to cooperate with,” says Richard Parker,
a senior fellow and lecturer at Harvard’s Kennedy School of
Government.

Past government shutdowns — the most recent was in 2013 — can
shed some light on how the federal government will proceed. But
there’s no way to know for sure what will be considered a
priority.

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Injecting further uncertainty is the question of when a new
budget will be passed to get the government up and running
again.

“The longer it goes, the more damaging it becomes because of the
accumulation of unpaid bills and more people being affected by not
being paid,” Parker says.

Here’s a rundown of who would likely suffer most from a
government shutdown, and who would escape relatively unscathed.

Biggest losers in a government shutdown

Government contractors and vendors. Government
spending accounts for roughly 35 percent of the U.S. gross domestic
product, and much of that adds to the bottom lines of government
contractors and vendors. A government shutdown likely would mean
that payments to vendors and contractors would stop, Parker
says.

International travelers. During the last
government shutdown, the Department of State slowed the application
process for new passports and visas, leading to long delays for
those seeking to travel internationally.

Taxpayers expecting a refund. A government
shutdown could delay the issuance of tax refund checks and the
processing of tax returns, especially for those who sent in paper
returns.

“The (Internal Revenue Service) would basically shut down, so
there would be no one there to process your taxes or send you your
refunds,” Goldwein says.

Recent retirees. If the last government
shutdown is any indication, new applications for Social Security
benefits would be significantly slowed, resulting in lengthy delays
for new beneficiaries.

“There will be no employees on the job to process the
applications, which require more intense handling than just simply
the mailing of checks, which is fairly automated,” Parker says.

Government employees. Nearly all government
workers would see their paychecks delayed by a government shutdown.
Those deemed “essential,” such as active military, corrections
officers, firefighters and utilities, would continue working with
reduced or delayed pay until things returned to normal. It is
likely they’d be reimbursed their missing salary, Goldwein says.
Nonessential workers would be furloughed, possibly without
pay.

New Medicare and Medicaid patients. Applicants
for Medicare and Medicaid benefits likely would face delays because
there wouldn’t be employees to process them.

Homebuyers and sellers. Those applying for
loans from the Federal Housing Administration could face major
delays in the processing of their loans in a shutdown, Parker says.
Those delays would push back closings, hurting homebuyers and
sellers. If the shutdown goes on long enough, it would “have a huge
and devastating effect” on the credit system for homebuyers, Parker
says.

Military veterans. If what happened in 2013 is
any indication, applications for disability benefits and pensions
could eventually be delayed or frozen entirely by a government
shutdown.

Treasury buyers. Investors in federal debt may
soon face some major disruptions. During the 2013 shutdown, the
Treasury market overall was thrown into a state of turmoil as
global investors worried about a U.S. government default on
Treasury bonds.

While it’s hard to know how the Treasury market will respond to
a new crisis, Parker says there’s likely to be volatility as global
investors decide what to do.

Investors. Many of the federal reports
investors devour, such as the Department of Commerce’s data on
gross domestic product and housing starts, and the Labor
Department’s monthly report on the job market, are being delayed by
a lengthy government shutdown. But more fundamental worries about
political gridlock in the U.S. could spook global investors, says
Goldwein.

“I don’t think there’s a huge direct cost of the shutdown to the
economy. I don’t think we’re going to see GDP numbers fall or stock markets sink or
anything like that,” he says.

Bankruptcy filers. Those filing for bankruptcy
may eventually face delays until a new budget is adopted. During
the 2013 shutdown, bankruptcy courts temporarily closed their
doors, and the same could happen this time.

Applicants for federal food stamps. If this
year is anything like 2013, new applications for food stamps could
be delayed by the shutdown, as workers in the U.S. Food and
Nutrition Service are furloughed. That could lead to significant
hardship for families in need of food assistance, Parker says.

Vacationers. National parks and museums all
over the U.S. will likely be closed in a government shutdown, says
Goldwein, throwing a monkey wrench in many Americans’ vacation
plans.

Likely to be unaffected

Current Social Security beneficiaries. It’s
likely the federal government will act to make sure Social Security
checks continue to flow to beneficiaries.

“There’s a little bit of ambiguity in this area, but during the
last shutdown, Social Security checks did continue to go out,”
Goldwein says.

Current Medicare and Medicaid beneficiaries.
The government will likely continue making payments to providers
for medical services through Medicare and Medicaid.

Even if it doesn’t, it’s possible Medicare providers will
continue to offer services with the expectations they’ll be paid
once the crisis passes, Goldwein says.

Employees and customers of government entities not
directly funded by the budget. If you’re closing on a
non-FHA mortgage, which don’t flow through Fannie Mae or Freddie
Mac, or you just need to send a letter through the post office,
don’t worry. These government entities won’t be affected by the
shutdown. They’ll continue to operate as normal.